The pot industry is a behemoth, with producers and stocks seeing a strong bull market over the last five years. As more states begin to get onboard with decimalization and legalization, the market expands, and the industry continues its march to the dominance of the alternative health sector.
The trend isn’t slowing down, and as of the end of 2020, cannabis is legal in 36 states for medical use, including in Washington D.C. Cannabis is legal for recreational use in 15 states, with more joining the ranks of freedom every month.
According to research from Arcview, legal cannabis sales amounted to $12.4-billion in 2019, with revenues expected to continue to climb to $46.8-billion by 2025. The company forecasts a 38% growth in annual pot sales in 2020, bringing in an estimated $20.4 billion in revenues for the year.
With these kinds of growth figures, it’s no wonder institutional investors are starting to take notice of the blooming cannabis sector. The onset of legalization means that barriers for entry into the market are loosening, and there are dozens of startups in the cannabis space.
From a dazzling variety of cannabis-specific CRMs to dispensary-tailored POS systems like Cova Software to supply chain management platforms like LeafLink there are solutions to suit all new business challenges brought about via this burgeoning new green industry.
Top 420-Friendly Investment Groups in 2022
Despite persistent constraining federal prohibition and subsequent limited access to traditional financing, many venture capital firms are raising hundreds of millions of dollars for opportunities in the legal marijuana market. Here are the biggest cannabis venture capital funds and what they’re doing in the space.
Backed by Per Thiel’s infamous “Founder’s Fund,” Privateer holdings is the first cannabis VC to reach $100-million in funding, closing on a $40-million deal in 2016.
According to data from Crunchbase, Privateer raised $228-million in four funding rounds as of the beginning of January 2018.
Privateer acquired Tilray, a leading industry manufacturer, as well as “The Goodship,” which produces edibles like baked goods and candy, and “Leafly,” also known as the “Yelp” of the cannabis world.
Entourage Effect Capital
EEC is one of the largest VC firms investing in the cannabis industry. Currently, the company has investments in more than 65 companies, with a total capital allocation of more than $200-million into the cannabis space.
The company has three managing partners Andy Sturner, Matt Hawkins, and Dov Szapiro, and the trio has an extensive vision for the cannabis industry over the next 10-years.
This Berkley-based VC is a seed fund led by Erik Moore. The firm invests across multiple tech-related companies in the cannabis industry.
The company has involvement in several verticals they feel provide the best returns. The Base Ventures team invested in more than 100-companies, with recent investments occurring in late 2019.
This organization is part of the MadMen group, specializing in consultancy services for cannabis firms. MedMen choose to partner with Wicklow Capital to fund cannabis businesses.
The company listed its Initial Public Offering (IPO) during a reverse-takeover of OutdoorPartner Media Corporation, a then unlisted venture based out of Canada. Currently, the company trades on the NYSE under the ticker $MMEN.
This VC invests in the cannabis space using a strategy focusing on legalization. They look for the opportunities legalization creates in the cannabis market.
Lizada Capital is always on the lookout for new investments. The company invests between $10,000 to $1-million in cannabis transactions, depending on the opportunity.
This private equity firm started investing in the cannabis space in 2014. The Wall Street Journal announced Tuatara’s total investment in the space as over $93-million as of 2014.
Since then, the company has involved itself in several ventures, including investing in Willie Nelson’s cannabis company “Willie’s Reserve.”
Tuatara Capital also has investments in TeeWinot Life Sciences, a biopharma firm specializing in cannabinoid extraction and production. Tuatara also has investments in Colorado-based GreenDot Labs, a premium extracts provider.
HALLEY Venture Partners
This company is a recent entrant into the cannabis space, with investments occurring over the last five years. Steve Schuman founded and operated this San Francisco-based VC, with over 17-years’ experience financing businesses in technology, agriculture, and manufacturing.
HALLEY gears its investments towards the tech sector of the cannabis market. The company focuses on scalable opportunities with excellent growth potential.
This VC invests in cannabis deals between $1-million and $25-million. The company has offices in Los Angeles and New York, with funding through Series, A, B, and C investments.
Anthony Redbod and David Kivitz head Archytas Ventures, looking for investment opportunities with strong management and cash flow positions.
The Chicago-based Salveo Capital focuses on investing in cannabis services supporting the legal cannabis market, like branding and licensing, as well as financial payments, technology, and other related services.
According to the VCs official website, it’s also looking to invest in cannabis firms that cultivate and dispense legal cannabis. It also has an interest in cannabis-infused products like water and edibles.
Poseidon Asset Management
Founded in 2013 by Emily and Morgan Paxhia, Poseidon Asset Management has over $145-million in assets under management (AUM) as of Q1 2020.
The firm invests in SaaS solutions and agricultural tech geared towards the cannabis market. The company has interests in equipment and management services for cannabis operations.
This VC focuses on tech and data businesses for the cannabis industry, based in Boca Raton, Florida. Notably, its partners raised $14-million in a single funding round back in June 2018.
According to information on the company’s official website, Phyto Partners’ portfolio includes company’s like data analytics provider “New Frontier” and “Grownetics,” a tech-based firm.
The company also has investments in “Leaf,” a provider of top-quality grow equipment, and “Flowhub,” a tech-solutions firm for managing cannabis companies.
Casa Verde Capital
This VC has one of the industry’s most colorful backers and founders – rapper Snoop Dogg. The company announced plans for its $25-million investor fund back in 2015, making a total of 22 investments into the cannabis sector.
The company notably invested several rounds of funding into “Dutchie,” a platform connecting consumers with retailers.
Casa Verde Capital also raised $45-million in January 2018. It’s one of the leading investment partners in companies like Green Bits, Trellis, Green Bits, and FunkSac, a Colorado-based packaging-solutions firm.
Herb CEO Key Takeaways
There is a lot of excitement right now in the VC world around cannabis, and for good reason. Still, it’s important to always use prudent financial wisdom when considering investment. Data and market intelligence reports are your best friends in correct valuations and appraisals.
Some important elevator pitch statistics to keep in mind:
- Cannabis is legal in 15 states recreationally and 36-states for medical use.
- Legal pot sales amounted to over a 38% increase in 2020.
- Some VCs and Private Equity firms see the opportunity in investing in cannabis projects.
- Most cannabis VCs and Private Equity Firms work with deals from $1-million to $25-million.
Are you a successful ganjapreneur who successfully went through a round or multiple rounds of investment? Do you have any strong opinions about any of the abovementioned VCs? Are there capital groups out there that are into cannabis that we missed?
Let us and our readers know in the comments below!